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Recent empirical studies have found evidence of unstable long run money demand functions if recent data are used. If the link between money balances and the macroeconomy is fragile, the rationale of monetary aggregates in the ECB strategy has to be doubted. In contrast we present a "stable''...
Persistent link: https://www.econbiz.de/10011518878
Money growth in the euro area has exceeded its target since 2001. Likewise, recent empirical studies did not find evidence in favour of a stable long run money demand function. The equation appears to be increasingly unstable if more recent data are used. If the link between money balances and...
Persistent link: https://www.econbiz.de/10011384239
This paper investigates possible non-linearities in the dynamics of the euro area demand for the narrow aggregate M1. A long-run money demand relationship is firstly estimated over a sample period covering the last three decades. While the parameters of the relationship are jointly stable, there...
Persistent link: https://www.econbiz.de/10013317661
circumstances more appropriate than the latter. What is more, they deliver results that are more in line with the economic theory …
Persistent link: https://www.econbiz.de/10010208785
The concept of integrated stochastic processes is widely used in empirical macroeconomics; and cointegration analysis …
Persistent link: https://www.econbiz.de/10012951750
The concept of integrated stochastic processes is widely used in empirical macroeconomics; and cointegration analysis … considerable empirical method for extracting information from monetary aggregates for monetary policy purposes. -- cointegration …
Persistent link: https://www.econbiz.de/10009620770
of money demand. This presumption is explored by means of a cointegration analysis. To separate income from wealth …
Persistent link: https://www.econbiz.de/10011518893
of money demand. This presumption is explored by means of a cointegration analysis. To separate income from wealth …
Persistent link: https://www.econbiz.de/10011384244
In this paper, an empirically stable money demand model for M3 in the euro area is constructed. Starting with a multivariate system, three cointegrating relationships with economic content are found: (i) the spread between the long- and the short-term nominal interest rates, (ii) the long-term...
Persistent link: https://www.econbiz.de/10013320329
Money is one of the main elements ("pillars") on which the policy strategy of the European Central Bank is based, and such a role requires that money has a stable relationship with the Euro area price level. Typically, the stability of this relation is tested in the context of the so called...
Persistent link: https://www.econbiz.de/10014159218